ADB, Vanuatu ink deals to boost renewable energy access

Published 11 October 2017

The Asian Development Bank (ADB) and the Government of Vanuatu have inked deals for a $15.1m project to boost renewable energy generation and energy access in the islands of Malekula and Espiritu Santo.

The loan and grant agreements for the Vanuatu Energy Access Project, approved by ADB’s Board of Directors in September, was signed by James Lynch, Deputy Director General of ADB’s Pacific Department, and Jean Pierre Nirua, Acting Minister of Finance and Economic Management at a ceremony in Port Vila.

“The project will deliver an increased supply of clean, renewable electricity to households in Malekula and Espiritu Santo,” said Mr. Lynch. “This will have a positive effect on livelihoods of rural households and will also decrease long-term reliance on diesel fuel.”

The project, which will be financed from the ADB-supported Pacific Renewable Energy Investment Facility approved in June, will construct a hydropower plant at Brenwe which will provide more than 90% of the total generated energy for the Malekula grid through to 2040. The electricity grid will be extended to additional 1,050 households in the two target islands. Newly connected households will be trained on options for electricity-based income generation, electricity safety, and budget management.

Around 75% of Vanuatu’s population lives in rural areas and have limited access to electricity nationwide, with electrification rate at a mere 33%. Where electricity is available in the provinces, the main energy generation source is diesel and other fossil fuels.

“We sought the generous assistance of ADB to help produce and deliver low-cost hydropower energy and grid extensions in the two targeted provincial centers,” said Mr. Nirua. “Once the renewable energy arrives in Malekula and Espiritu Santo, the lives of the people in both islands will significantly change for the better. The supply of low-cost energy will greatly enhance increased business activity and contribute to better economic growth in the villages.”

To help fund the project, ADB will provide a concessional loan equivalent to $2.5 million, sourced from ADB’s ordinary capital resources. ADB’s Special Funds resources will also provide a $2.5 million grant. The Strategic Climate Fund will contribute a $7 million grant and the Government of Vanuatu will deliver $3.1 million.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.